Peter Hoskin

IFS: The Spending Review was regressive – sorta

The second half of the IFS briefing was all about the distributional effect of the Spending Review. And you know what that means: decile charts – and lots and lots of them. As it happens, there were some areas of agreement between the IFS and the Treasury figures. Both, for instance, say that the welfare measures set out in yesterday’s Spending Review will affect the least well-off the most. But there was one main area of disagreement. The Treasury says that its combined tax and welfare measures up to 2012-13 will be broadly progressive. The IFS says that they will be regressive.

This is exactly the same issue that cropped up in August, when the IFS was commissioned to write a report by the End Child Poverty Campaign. And it comes about because they model certain tax and benefit changes differently from the Treasury, to produce the graph below. It’s the white line (measuring the impact of tax and benefit chages on percentage income) that’s important – the IFS describe this as “slightly regressive or flat within the bottom nine-tenths of households.”

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